I’m a newbie. I just received an Oil and Gas Lease (flat rate paid-up) from Antero Corp. for a parcel in the West Union district of Doddridge County. I had no idea this land existed in my family until recently. They’re offering a $300 bonus and added an addendum from 12 1/2% royalty to 15% of the gross proceeds for both oil and/or gas. They want me to sign and notarize a 6 page contract, complete a W-9, and return within 30 days. The gross acres is only .18440. For such a small amount of land is it worth negotiating for higher bonus or royalty? And, are there any red flag terms or verbiage I should watch out for in this contract? Also, do you find it curious that they originally offered 12 1/2% royalty in the contract, but then included an addendum on the last page of the contract, raising the royalty to15% without me asking for more? Any advice is welcome. Thank you.
KnDfort welcome to the forum. Antero’s $300 bonus offer on your small acreage equates to around $1,650 for a full acre. That is very low. I would ask for at least $800-$900 for the bonus which will equate to around $4,000+ per acre which is in the more normal range. As to royalty interest 18% is a reasonable number for Doddridge County. Negotiating with a small parcel doesn’t lend much leverage but the companies always lowball with their first offers. Also make sure in the addendum that the lease is without any production cost deductions and ideally no shared production or severance tax deductions. Also no automatic extension of the lease term. 5 years is the max you want to agree too. Hope that helps.
I just thought I’d say I agree with dome. Also ask for a Formation Limit so the lease will only apply to the Marcellus Shale, for No Warranty of Title so you’re not making an promises that you own the property, and a No Recoupments clause so they can’t take any money back if they decide you own less than they think you do now. Also, get a Hold Harmless clause and a clause that says you have no knowledge of old wells or leases. That should take care of liability issues.
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